After Hours Action: Microsoft

With Microsoft easily beating Street estimates, how should you game this stock in the wake of earrings?

Shares of Microsoft kicked about 2% higher in extended trade after the software giant easily beat estimates due to higher sales of its flagship Windows and Office software and the launch of the latest blockbuster Halo video game.

Looking at the numbers, the company earned $5.4 billion, or 62 cents a share in its fiscal first quarter, up 51 percent from $3.6 billion, or 40 cents a share last year.

Sales for the most recent quarter jumped to $16.2 billion, from $12.92 billion last year.

Wall Street analysts who monitor Microsoft estimated on average that the Redmond, Wash., company would report a profit of 55 cents a share on sales of $15.8 billion, according to data accumulated by Thomson Reuters.

Shares of Microsoft were changing hands about 2 percent higher in extended trading Thursday. Get after-hour quotes for Microsoft here.

Looking at sales by business unit, Microsoft reported Windows and Windows Live revenue of $4.79 billion, Server and Tools sales of $3.96 billion, Online Services revenue of $527 million, Business Division revenue of $5.13 billion, and Entertainment and Devices sales of $1.8 billion.

What’s the trade?

I thought Microsoft should have seen a bigger boost to the bottom line, says Joe Terranova. The 200-day for this stock is $26.95. If it sustains above that level I’m a buyer but it needs to prove itself technically first.

I agree that it should have been a better quarter when you compare Microsoft to some of the other tech names that have reported, adds Guy Adami. They were innovators years ago – but that’s year’s ago.

I look at Microsoft as a utility, says Gary Kaminksy. They trade like a utility. I wish they’d start returning more cash to shareholders. But right now the stock is in no-man's land.

I don’t think they’re going to hike the dividend, counters Adami. They need to do something aggressive – perhaps a change in management. That would get me excited.

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For Joe Terranova Terranova is chief market strategist of Virtus Investment Partners, LTD.Virtus Investment Partners own more than 1% of (ABAX)Virtus Investment Partners own more than 1% of (ALK)Virtus Investment Partners own more than 1% of (AMKR)Virtus Investment Partners own more than 1% of (CASS)Virtus Investment Partners own more than 1% of (CSVI)Virtus Investment Partners own more than 1% of (IGE)Virtus Investment Partners own more than 1% of (LDR)Virtus Investment Partners own more than 1% of (LPHI)Virtus Investment Partners own more than 1% of (MGRC)Virtus Investment Partners own more than 1% of (NRCI)Virtus Investment Partners own more than 1% of (DBV)Virtus Investment Partners own more than 1% of (XLB)Virtus Investment Partners own more than 1% of (XLP)Virtus Investment Partners own more than 1% of (XLY)Virtus Investment Partners own more than 1% of (XLF)Virtus Investment Partners own more than 1% of (XLI)Virtus Investment Partners own more than 1% of (XLU)Virtus Investment Partners own more than 1% of (SUBK)Virtus Investment Partners own more than 1% of (WDFC)Virtus Investment Partners own more than 1% of (YDNT)Virtus Investment Partners own more than 1% of (DRYS)

For David Maris***No Disclosures**

For Benjamin SalisburyFBR has managed a (MEE) public offering and received compensation for investment banking services from the company in the past 12 months.FBR makes a market in (MEE) A member of Salisbury’s team owns shares of (RIG)FBR makes a market in (RIG)FBR makes a market in (URS) FBR makes a market in (ROSE) FBR makes a market in (PCX)

For Brian StutlandStutland Equities is long (TLT), short callsStutland Equities is long U.S. Treasuries